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Alborosie
3 years ago
5

(Calculating the cash conversion cycle) Network Solutions just introduced a new, fully automated manufacturing plant that produc

es 2,000 wireless routers per day with materials costs of $50 per router and no other costs. The average number of days a router is held in inventory before being sold is 45 days. In addition, the company generally pays its suppliers in 30 days, while collecting from its customers after 25 days.
a. What is the cash conversion cycle?

b. What would happen to the cash conversion cycle if the company could stretch its payments to suppliers from 30 days to 50 days?

c. How much would working capital financing be reduced if the company stretched its payments to suppliers from 30 days to 50 days?
Business
1 answer:
forsale [732]3 years ago
3 0

Answer and Explanation:

The computation is shown below:

a. As we know that

Cash conversion cycle is

= Days inventory outstanding + days sale outstanding - days payable outstanding

= 45 days + 25 days - 30 days

= 40 days

b. Now if the payment of supplier changed from 30 days to 50 days which is

Cash conversion cycle is

= Days inventory outstanding + days sale outstanding - days payable outstanding

= 45 days + 25 days - 50 days

= 20 days

c. Now the reduction in working capital is

= Difference in days × production × material cost per order

= 20 days × 2,000 × $50

= $2,000,000

We simply applied the above formulas

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3 years ago
On April 11 of the current year, Zack Corporation had a market price of $48 per share of common stock. Its par value was $10 per
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Answer:

The dividend yield for Zack Corporation 8%,the first option

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The dividend yield is a measure of business performance used by investors which compares the dividend paid by a stock to its market price(price paid by investors to acquire the stock)

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The correct option is the first option 8% since the figure above was simply rounded down to whole number

3 0
3 years ago
Zoom Enterprises expects that one year from now it will pay a total dividend of $ 5.0 million and repurchase $ 5.0 million worth
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Answer:

Consider the following calculations

Explanation:

The price per share is computed as shown below:

Present value of equity is computed as follows:

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5 0
3 years ago
An aging of a company's accounts receivable indicates that $8500 are estimated to be uncollectible. If Allowance for Doubtful Ac
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Answer:

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